Delhi High Court
Cargill India Pvt Ltd vs Gati Ltd on 29 August, 2019
Equivalent citations: AIRONLINE 2019 DEL 1521, 2019 (6) ADR 272
Author: Sanjeev Narula
Bench: Sanjeev Narula
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Reserved on: 18th July, 2019
Pronounced on: 29th August, 2019
+ CS (COMM) 740/2017
CARGILL INDIA PVT LTD ..... Plaintiff
Through: Mr. Pravin Anand and Mr. Vibhav
Mithal, Advocates.
versus
GATI LTD ..... Defendant
Through: Mr. T.K Tiwari, Advocate
CORAM: JUSTICE SANJEEV NARULA
JUDGMENT
SANJEEV NARULA, J I.A. No. 16635/2018 (application under Section 124 of the Trademarks Act read with Order 14 Rule 5 and Section 151 of CPC.
1. Plaintiff has filed the present suit for permanent injunction restraining infringement of trademark, passing of, damages, delivery up etc.
2. It is the case of Plaintiff that it is the registered proprietor of the trademark "NATUREFRESH' and the Defendant is using an identical trademark "GATI Nature Fresh Apples" (hereinafter referred to as „the impugned CS (COMM.) 740/2017 Page 1 of 12 mark‟) and infringing Plaintiff's statutory and common law rights. Defendant is contesting the suit on the ground that the words "NATURE FRESH" in the impugned mark are being used in a descriptive and bona-fide manner to describe the nature and characteristics of its goods and not as a trademark. Defendant also contends that Plaintiff‟s trademark being generic in nature, its registration for the mark "NATUREFRESH" is invalid. Defendant argues that no proprietorship can be claimed over such words under the Trademark Act, 1999 (hereinafter 'the Act').
3. On 2nd November 2016, after Plaintiff‟s evidence was concluded, Defendant filed an amended Written Statement and disclosed that its mark "GATI Nature Fresh Apples" had been registered under TM No.1775864. Plaintiff is aggrieved with the above action and as a precursor for initiating rectification proceedings before IPAB, by way of the present application, it seeks framing of an additional issue in respect of invalidity of Defendant‟s registered trademark/impugned mark. Plaintiff contends that it learnt about the registration of the impugned mark, in October 2016, when Defendant filed IA No. 13657 of 2016 to amend its Written Statement. Originally, in its unamended written statement, Defendant had claimed that they are using "NATURE FRESH" in a descriptive sense and not as a trademark. Thereafter in the amended written statement, it was claimed that the impugned mark has been registered. Plaintiff prays that it is necessary to frame an additional issue regarding the invalidity of the Defendant's trademark registration in order to avail the remedy of rectification. In support of his submission reliance has been placed on the decision of the Supreme Court in Patel Field Agencies & Another v. P. M. Diesels Ltd.
CS (COMM.) 740/2017 Page 2 of 12&Ors., (2018) 2 SCC 112.
4. Defendant, on the other hand, contends that the present application has been filed belatedly and is not maintainable. Plaintiff was aware about Defendant's application for registration. This fact was mentioned in the letter dated 7th January 2010, issued in reply to Plaintiff's cease and desist notice. In the said letter Defendant categorically informed the Plaintiff that, it has applied for the registration of the impugned mark in relation to the supply and Distribution chain management. Thereafter on 28th January 2016, a copy of the registration certificate was also filed before the Court. Despite being aware of the registration of the impugned mark, Plaintiff did not take any steps to file the rectification application. The same should have been filed within three months of such knowledge and since, the plea was not raised in time, it should be assumed that Plaintiff has abandoned its claim/objection regarding invalidity of Defendant's registered trademark.
5. Learned counsel for the Defendant also relies upon the order dated 31st May 2017, wherein Defendant's submission is recorded that the present suit is liable to be stayed as per Section 124 of the Act. Despite Defendant‟s categorical stand, at that stage, Plaintiff instead proceeded to cross-examine Defendant‟s sole witness and concluded the trial. Thereafter, the matter was listed before the Court on four successive occasions; however, Plaintiff did not raise the plea of invalidity during any of the hearings. Relying upon the judgment of Data Infosys Ltd. &Ors v. Infosys Technologies Ltd., 2016 (65) PTC 209 (Del) (FB), Defendant further contends that even if the Plaintiff had not raised or availed the plea of invalidity of registration of the CS (COMM.) 740/2017 Page 3 of 12 Defendant's mark, it could still have independently filed a rectification application before IPAB, without the leave of the Court. Defendant has also raised several grounds and contentions on merits of the case touching upon the invalidity of Plaintiff's mark.
6. Since, the validity of Plaintiff's trademark is not in question, at this stage; I do not find it necessary to examine Defendant's grounds relating legitimacy of Plaintiff's registration. For deciding the application in hand, Court has to proceed in accordance with Section 124 of the Act, which reads as under:
"124. Stay of proceedings where the validity of registration of the trade mark is questioned, etc.--
(1) Where in any suit for infringement of a trade mark--
(a) the defendant pleads that registration of the plaintiff's trade mark is invalid; or
(b) the defendant raises a defence under clause (e) of sub-section (2) of section 30 and the plaintiff pleads the invalidity of registration of the defendant's trade mark, the court trying the suit (hereinafter referred to as the court), shall, --
(i) if any proceedings for rectification of the register in relation to the plaintiff's or defendant's trade mark are pending before the Registrar or the Appellate Board, stay the suit pending the final disposal of such proceedings;
(ii) if no such proceedings are pending and the court is satisfied that the plea regarding the CS (COMM.) 740/2017 Page 4 of 12 invalidity of the registration of the plaintiff's or defendant's trade mark is prima facie tenable, raise an issue regarding the same and adjourn the case for a period of three months from the date of the framing of the issue in order to enable the party concerned to apply to the Appellate Board for rectification of the register.
(2) If the party concerned proves to the court that he has made any such application as is referred to in clause (b) (ii) of sub-
section (1) within the time specified therein or within such extended time as the court may for sufficient cause allow, the trial of the suit shall stand stayed until the final disposal of the rectification proceedings.
(3) If no such application as aforesaid has been made within the time so specified or within such extended time as the court may allow, the issue as to the validity of the registration of the trade mark concerned shall be deemed to have been abandoned and the court shall proceed with the suit in regard to the other issues in the case.
(4) The final order made in any rectification proceedings referred to in sub-section (1) or sub-section (2) shall be binding upon the parties and the court shall dispose of the suit conformably to such order in so far as it relates to the issue as to the validity of the registration of the trade mark.
(5) The stay of a suit for the infringement of a trade mark under this section shall not preclude the court from making any interlocutory order (including any order granting an injunction directing account to be kept, appointing a receiver or attaching any property), during the period of the stay of the suit."
7. The Supreme Court in Patel Field Agencies & Another (supra) has clearly held that the Tribunal (Intellectual Property Appellate Board in the present case) will have seisin of the matter in relation to the rectification, CS (COMM.) 740/2017 Page 5 of 12 only if the Civil Court is satisfied that an issue with regard to the invalidity of a registered mark ought to be framed in the suit. The relevant paragraphs of the said judgment are being reproduced hereunder:-
"27. Rather, from the resume of the provisions of the 1958 Act made above it becomes clear that all questions with regard to the validity of a Trade Mark is required to be decided by the Registrar or the High Court under the 1958 Act or by the Registrar or the IPAB under the 1999 Act and not by the Civil Court. The Civil Court, infact, is not empowered by the Act to decide the said question. Furthermore, the Act mandates that the decisions rendered by the prescribed statutory authority [Registrar/High Court (now IPAB)] will bind the Civil Court. At the same time, the Act (both old and new) goes on to provide a different procedure to govern the exercise of the same jurisdiction in two different situations. In a case where the issue of invalidity is raised or arises independent of a suit, the prescribed statutory authority will be the sole authority to deal with the matter. However, in a situation where a suit is pending (whether instituted before or after the filing of a rectification application) the exercise of jurisdiction by the prescribed statutory authority is contingent on a finding of the Civil Court as regards the prima facie tenability of the plea of invalidity.
28. Conversely, in a situation where the Civil Court does not find a triable issue on the plea of invalidity the remedy of an aggrieved party would not be to move under Sections 46/56 of the 1958 Act but to challenge the order of the Civil Court in appeal. This would be necessary to avoid multiple proceedings on the same issue and resultant conflict of decisions.
29. The 1958 Act clearly visualizes that though in both situations i.e. where no suit for infringement is pending at the time of filing of the application for rectification or such a suit has come to be instituted subsequent to the application for rectification, it is the Registrar or the High Court which constitutes the Tribunal to determine the question of invalidity, the procedure contemplated CS (COMM.) 740/2017 Page 6 of 12 by the Statute to govern the exercise of jurisdiction to rectify is, however, different in the two situations enumerated. Such difference has already been noted.
30. The intention of the legislature is clear. All issues relating to and connected with the validity of registration has to be dealt with by the Tribunal and not by the civil court. In cases where the parties have not approached the civil court, Sections 46 and 56 provide an independent statutory right to an aggrieved party to seek rectification of a trade mark. However, in the event the Civil Court is approached, inter alia, raising the issue of invalidity of the trade mark such plea will be decided not by the civil court but by the Tribunal under the 1958 Act. The Tribunal will however come into seisin of the matter only if the Civil Court is satisfied that an issue with regard to invalidity ought to be framed in the suit. Once an issue to the said effect is framed, the matter will have to go to the Tribunal and the decision of the Tribunal will thereafter bind the Civil Court. If despite the order of the civil court the parties do not approach the Tribunal for rectification, the plea with regard to rectification will no longer survive."
8. Although the said judgment was rendered in the context of the 1958 Act, it is expressly held by the Supreme Court in the judgment [in paragraphs 10, 20, 41 and 42 thereof] that the provision of the 1999 Act are in para materia with the corresponding provisions of the 1958 Act. At this stage, in order to arrive at the requisite satisfaction the Court is only required to form a prima facie view regarding tenability of the plea of invalidity of Defendant's registered mark in accordance with Section 124 (1) (b) (ii) of the Act. Therefore, I now proceed to examine if Plaintiff has established a prima facie case in its favour. Defendant is the registered proprietor of the trademark "GATI Nature Fresh Apples". Defendant in its unamended CS (COMM.) 740/2017 Page 7 of 12 written statement has contended that it is using "NATURE FRESH" in a descriptive sense and not as a trademark. Mr. Praveen Anand, learned counsel for the Plaintiff submits that in absence of any disclaimer, the plea of the Defendant that "NATURE FRESH" is used in a descriptive sense is contradicted. He submits that Defendant's certificate for use and legal proceedings in Trademark Journal Extract (Ex. DW 1/3 and DW 1 / 4) shows that there is no disclaimer on the words "NATURE FRESH". He further submits that since Defendant itself is using "NATURE FRESH" as a trademark, contrary to Section 9 and Section 11 of the Act, it cannot be allowed to approbate and reprobate at the same time. He also submits that, Plaintiff and Defendant both are using the mark "NATUREFRESH" for sale of fresh fruits, the marks being identical, it is likely to cause confusion which can be presumed under Section 29 (2) (c) read with Section 29 (3) of the Act. The trade channels of the Plaintiff's and Defendant's mark and goods are the same as they sell their products online.
9. I find merit in the above noted contention raised by the Plaintiff. Defendant's registration for the composite impugned mark without a disclaimer on "NATURE FRESH" is certainly a ground for rectification that the Plaintiff is entitled to raise in the appropriate proceedings. Thus, the plea regarding the invalidity of the registration of the Defendant's mark is prima facie tenable. Furthermore, Defendant's contention that the Plaintiff has abandoned the right to file the application under Section 124 of the Act cannot be accepted. In the order dated 31st May 2017, the Court had recorded Defendant's contention regarding its registration and the applicability of provisions of Section 124 of the Act. Plaintiff at that point of CS (COMM.) 740/2017 Page 8 of 12 time refuted the same. The relevant portion of the order reads as under:
"CS (OS)280/2010 Learned counsel for the plaintiff submits that in view of the amendments which have been permitted by this Court and theregistration certificate of the defendant having been taken on record, he seeks permission of this Court to file a supplementary affidavit.Permission granted. Needful be done in three weeks. Replication, to the amended written statement now be filed bythe plaintiff in three weeks.
For framing of additional issues, if any, list befote Court on 24.10.2017.
Learned counsel for the defendant points out that in view of the Provisions of Section 124 of the Trade Mark Act since the defendantalso has a registration in his favor the present suit proceedings will have to be stayed. This submission is refuted bythe learned counselfor the plaintiff This point shall be considered on the next date."
10. On a reading of the aforenoted order, it can be discerned that earlier Defendant canvassed the same proposition that is now being raised by the Plaintiff. The question that arises is whether Plaintiff's refusal can be construed as an abandonment of the right to challenge the registration. The law, relating to Section 124 of the Act, was finally settled by the Supreme Court on 29th November 2017, in Patel Field (supra). It is after the pronouncement of the aforesaid decision; the Plaintiff has filed the present application. Prior thereto, on the strength of judicial precedents, as contended by Mr. Anand, Plaintiff intended to continue with the suit. Be that as it may, all issues relating to and connected with the validity of registration have to be dealt with by the Tribunal and not the Civil Court. Although there has been a delay on part of the Plaintiff in filing the present application, CS (COMM.) 740/2017 Page 9 of 12 however, I am unable to hold the same to be an act of abandonment. It has been held in several decisions that abandonment requires a positive act on behalf of the Plaintiff to relinquish its right. Significantly, the Act does not prescribe any time limit on any party to file an application under Section
124. The time limit of three months prescribed under section 124(1) (b) (ii) starts after the Court has framed the additional issue. By virtue of Section 124 (3), the issue of invalidity of registered trademark would not survive to be decided in the suit, if, the Plaintiff does not raise this issue by filing the rectification proceedings within the stipulated time of three months and the plea of invalidity would be deemed to have been abandoned in the suit. On this aspect, the observations of this Court in Data Infosys Ltd. (supra) become relevant, which reads as under:
"32. Prima facie evaluation of tenability of the plea of invalidity under Section 124 is only for the purpose of determining whether, or not, the proceedings in the suit for infringement should be adjourned (not stayed) for a period of 3 months from the date when the said issue is considered and framed. However, in case rectification proceedings are not filed within the period of three months from the date of raising the issue of invalidity and the prima facie consideration of the validity of the said plea, the plea of invalidity of the registered trademark is deemed to have been abandoned, and the Court shall proceed with the suit as regards the other issues. By virtue of Section 124(3), the issue of invalidity of the registered trademark would not survive to be decided in the suit, as the plea of invalidity would be deemed to have been abandoned in the suit. Even if the plaintiff, or the defendant -as the case may be (i.e. the party concerned setting up the invalidity plea), files a rectification application under Section 47/57 of the Act after the expiry of the period of three months, or such extended time as the Court may CS (COMM.) 740/2017 Page 10 of 12 grant, though the rectification application would be maintainable and would be decided on its own merits by the IPAB, the final decision of the IPAB on the said application would have no bearing on the suit, in view of the deemed abandonment of the plea of invalidity. Thus, belated filing of the rectification proceedings (i.e. beyond the period of three months, or such extended time as may be granted by the Court) would not result on the stay of the suit. ..."
11. From a reading of the aforesaid judgment it becomes clear that the question of abandonment can be presumed only if the rectification proceedings are not filed within the period of three months from the date of raising the issue of invalidity. This is not the situation in the present case, as that stage has not occurred as of yet. Defendant's contention that the Plaintiff has waived or abandoned its right to challenge the invalidity of Defendant's impugned mark, as provided under Section 124 (3) of the Act is of no consequence. I therefore, reject the objections of the Defendant qua maintainability of the application.
12. The application is allowed and an additional issue is framed to the following effect:
"9. Whether the registration of the Defendant's mark i.e. "GATI Nature Fresh Apples" is invalid?"and liable to be removed / cancelled from the Register of Trademarks? OPP
13. In view of the provisions of Section 124 (1) (b) (ii), the proceedings are adjourned for a period of three months to enable the Plaintiff to take CS (COMM.) 740/2017 Page 11 of 12 appropriate steps in accordance with law to raise the plea of invalidity by preferring rectification proceedings before the IPAB under Section 47 and 57 of the Act.
14. The application is allowed in the above terms.
SANJEEV NARULA, J.
August 29, 2019 ss CS (COMM.) 740/2017 Page 12 of 12